Patronage of government treasury bills in Ghana has recorded another oversubscription ahead of the swearing-in of President-elect John Dramani Mahama.
The auction of the government’s short-term instruments last week recorded a significant 24% oversubscription, following a marginal 9% oversubscription in the previous week.
The latest auction results published by the Bank of Ghana (BoG) indicate that the government planned to borrow a total of GHC4.32 billion last week. However, through the auction of treasury bills in Ghana, the government was able to accrue a total of GHC5.37 billion, exceeding the target by GHC1.05 billion. This represents an oversubscription of 24% of the planned target.
This development signifies a gradual rebound of investor confidence in Ghana’s short-term instruments, particularly treasury bills, ahead of the government transition.
As usual, the massive oversubscription came at the expense of another streak of increases in interest rates. The auction results show that not all bids for the 182 and 364-day bills were accepted. A majority—65.74% of the total bids accepted—came from the 91-day instrument, accruing GHC3.53 billion.
The 182-day bill contributed just 11.25%, totaling GHC604.39 million, while the 364-day instrument overtook the 182-day bill, contributing 23.01% with GHC1.24 billion.
The persistent trend in interest rate hikes continued across all tenors of treasury bills in Ghana. The 91-day bill witnessed an increase from 28.036% to 28.190%, the 182-day instrument rose from 28.683% to 28.917%, and the 364-day instrument increased from 30.071% to 30.151%.
Experts caution that the consistent rise in the yields of treasury bills in Ghana could exacerbate the existing debt overhang, increasing the government’s debt service obligations. Higher yields mean higher costs of servicing these short-term instruments when they mature.
This debt burden further narrows the fiscal space, leaving little room for development initiatives such as capital expenditure, social protection, and funding of key policy measures.
Despite these challenges, the second consecutive oversubscription of treasury bills in Ghana reflects a gradual rebound in the economy.
Meanwhile, the government plans to raise another GH₵5.2 billion this week through the auction of additional treasury bills in Ghana.
